The Complete Ira Sohn Conference Highlights

While Paul Singer, Kyle Bass, and Stan Druckenmiller got the headlines, there were in total 14 worthwhile speakers at yesterday's Ira Sohn conference. Though many of the themes were unsurprising, it is nonetheless useful to compare your own views to those of these professional money managers who are now bludgeoned daily by the 'idiot-maker' rally... of course, that is, until they are proved 100% correct.


Jones Trading Recap of Ira Sohn Conference  (Yousef Abbasi)

Paul Singer - Elliot Management

  • Singer talks about the global banking environment, notes that it is opaque and very highly leveraged.
  • He says that Value-at-Risk (VAR) is not the appropriate measure for a financial institution's health.
  • He notes that the average person is not feeling the recent equity rally, says they are worried about jobs, paying more for life necessities.  This distortion is furthering class warfare.
  • On bonds, they are mispriced in the US, UK and Japan.  He does not say short bonds, but says that there are distortions in the market.

Kyle Bass - Hayman Capital

  • Stock Idea - Long DEXO - Company is a re-org but has a solid turnaround plan that should take shape over the next three years.  He says that it is a cheap option, although it is risky.  He says debt should trade to par and that shares could rise 5x.
  • On Japan, he says the Yen will continue to weaken and the JPY could hit 120, he sees Japan CPI hitting 2% in the next couple of years.  He calls the current policy of QE in Japan "adding a ponzi scheme to a ponzi scheme."

Li Lu - Himalaya Capital

  • Idea is South Korean preferred shares and mentions - Long Samsung, Hyundia.  Notes that these trade at a deep discount because of confusion around if they are debt or equity.

Keith Meister - Corvex Management

  • Stock Ideas - Long LVLT, TWTC
  • Says that spread between debt and equity is as wide as it has ever been and companies have plenty of options to make purchases and create growth.
  • TWTC -Company is substantially under-levered.  He thinks TWTC can continue to grow organically and could be bought at the right time. Says company could be interesting for large Telecom or Cable operators.  He sees 40% upside to shares.
  • LVLT - Company has been historically levered. He sees LVLT as a potential consolidator in the business. The company is a scale assets and a real estate play, says that it reminds him of Sprint when people look at the asymmetry in terms of risk/reward.

Bill Ackman - Pershing Square

  • Stock Idea - Long PG
  • He notes the company is a great business and its under-earnings relative to what he sees as its intrinsic earnings power.  He notes several underlying PG brands that could be stand-alone companies.
    Says that 40% of sales are coming from fast growing, emerging markets.
  • Believes that the company under-earns because it has a bloated overhead cost structure, but that most of the issues the company suffers from are readily fixable.
  • Says company should be able to generate 5% organic growth - emerging markets contributing 7%-10%.  Also believes that gross margins are 200bps below where they should be and that the company should be able to generate a 24% EBIT margin.
  • On PG CEO, Bob McDonald - He notes that he sits on 21 other corporate board and could be "distracted" by these other interests.  He says they've made progress, but are still lagging some competitors - wants to see more improvement over next few quarters.
  • Intrinsic value ofPG seen at $125, stock is trading at $78.

Stanley Druckenmiller - Duquesne Family Office

  • Stock Idea - Long GOOG
  • Commences by calling QE a nuclear weapon and believes that Bernanke has embarked on the wrong policy. But he notes that listening to Bernanke shows that he's not going "wobbly anytime."
  • No condition of Bear market until Fed changes - so expect the market to continue to rise.
  • On commodities, he says that the super-cycle is ending and believes that their a "poisonous cocktail" in commodities when it comes to China.
  • He says he thinks the AUD will sell-off hard.
  • He is bullish onGOOG  - says that its a great tech company and notes some of their new technologies pushing from glass to auto.

Mitchell Julis - Canyon Partners

  • Stock Idea - Long CCO
  • CCO -he sees it as a name that is trading at a depressed multiple.  Notes that although the stock is complex, it is interesting as leveraged equity and has been a good return for investors.

Steve Eisman - Emrys Partners

  • Stock Ideas -Long LEN, SPF, PHM, FOR, CLNY, OCN. Short HCG.CN.
  • US vs. Canadian Housing is the presentation and Eisman comes out bullish on US Housing saying that it is still near the bottom.  Although builders are NOT cheap, he notes improving fundamentals.
  • FOR -He says is worth $30/shr as a land play - it owns 136k of undeveloped land.
  • CLNY -Another small play on housing that has potential
  • OCN -Says is perhaps the most powerful but counterintuitive pay on housing.  He says the stock is complete mis-priced as it is "undervalued by a lot."
  • With regards to Canada, he notes that their banking system is holding higher leverage ratios and that the Canadian equivalent to our GSEs is insuring much of the mortgages.  Says he believes its too late for a soft-landing for housing in Canada.
  • HCG.CN -The largest non-prime mortgage originator in Canada - it has been pretty aggressive with growth and will have problems if housing rolls over.

Jim Chanos - Kynikos

  • Stock Ideas -Short WDC, STX.
  • Chanos notes that PC sales continue to fall as tablets are taking over.  He also notes that the memory space is facing competition from the cloud.
  • STX -he says that the company's management has been engaged in "opportunistic" sales and that insiders are selling out or leaving.

Tor Olav Troim - Golar Lng Energy

  • Talks about the pros and cons of the shipping industry.

Jon Jacobson - Highfields Capital

  • Stock Ideas -Short DLR.  He also says be wary of T and LINE.
  • DLR -says dividend is unsustainable and that its different from any other REIT as its business has low barriers to entry - notes thatAMZN and MSFT are in the midst of a data center war as well.

Clifton Robbins - Blue Harbor Group

  • Stock Idea - Long AKAM.
  • Says that he sees the perfect storm brewing in M&A and is very bullish on it - noting cash on corporate balance sheets, etc.
  • AKAM -15%-30% of the world's internet traffic is touched by the company, its a singularly unique business.

Jeff Gundlach - DoubleLine

  • Stock Idea -Short CMG.
  • Gundlach says that everything is backwards and that although he expects QE to continue - he thinks that the Fed Minutes show "talk" about ending QE, just for the illusion.
  • He says investors should NOT be asking when QE is going to end, but they should be asking how to invest if it never does.
  • He says short French bonds as France is a basketcase.

David Einhorn - Greenlight Capital

  • Stock Idea -Long OIS.
  • He notes its a low cost provider of oil rigs and that it has better margins than peers but is not getting credit for them.
  • He notes that if Jana Partners gets its plan to spin certain operations off into a REIT, the company could be worth $155/shr.


(H/T Colin McFag)